Vermont Consumer Litigation Funding Company Bond Requirement

consumer litigation funding company

Those preparing to register a consumer litigation funding company in Vermont must post a letter of credit or surety bond equal to double the amount of their largest funded amount in the last three calendar years or $50,000, whichever is greater. Vermont House Bill 84 requires greater regulations to all consumer litigation funding companies and takes effect July 1, 2016. A surety bond is one new regulation to protect consumers against this industry.

What is a Consumer Litigation Funding Company?

A consumer litigation funding company provides funds to a consumer to cover personal expenses during a consumer’s civil action or legal claim. In return, the consumer gives the litigation funding company a right to receive part of the proceeds from the settlement. If there are no proceeds obtained, the consumer does not have to repay the person the funded amount or any other fees. Normally, a consumer litigation funding company focuses on personal injury claims.

About the Bond Requirement

A surety bond or letter of credit is mandatory. It provides the Commissioner with proof of financial stability. The bond, in this instance, is in place to ensure payment of civil penalties or restitution if a consumer litigation funding company fails to comply with the consumer protections laws. Vermont Act 55 helps explain the purpose of a bond for consumer litigation funding companies in greater detail.

Additional Requirements

Along with providing a surety bond or letter of credit, those wanting to start or continue a consumer litigation funding company must do the following:

  • Submit a $600 fee at the time of registration
  • Registration must be renewed every 3 years
  • A contract must be written with each consumer

For more information about registration and general consumer protection requirements contact the insurance department in the Department of Financial Regulations. To get a surety bond in Vermont visit and get help from an expert.

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About the Author

Sam Armetta
Sam Armetta is a senior at the University of Missouri - Columbia studying journalism with an emphasis in strategic communication. He is a member of the marketing department and outreach team for, a leading provider of online bonding for clients nationwide.